May 09, 2023

Legal Sports Betting

What Does It Mean for Individuals, Governments, and Sports Organizations?

Sports betting has been illegal in Canada and most of the U.S. until recent years. Despite this, it’s long been a lucrative and growing industry with much of the activity happening illegally or outside of government regulations.

The U.N. estimates that the global illegal sports betting market is worth nearly $1.7 trillion. In Canada, government reports indicate that $10 billion is spent each year on illegal, black-market betting and an additional $4 billion on grey-market sites linked to offshore markets where gambling is legal.

Recently, however, this once illegal industry has been brought under government regulation. A 2018 U.S. Supreme Court ruling struck down a federal law that banned sports betting outside of Nevada. In 2021, Canada passed federal legislation that legalized single-game sports betting.

In both countries, states and provinces are now free to set regulations and laws around gambling on sports. Legal sports betting already takes place in 30 U.S. states plus DC, while every Canadian province and territory outside of Nova Scotia has some level of legalized betting.

Like the prohibition on alcohol or the recent legalization of recreational cannabis, many of the arguments in favor of legalized sports betting are centered around regulating and taxing an activity that is already taking place. On the other hand, gambling can be an addictive and damaging activity that has impacts at both the individual and societal levels.

This article will examine some of the arguments that support and oppose the legalization of sports betting.

The Arguments in Favor of Legalized Sports Betting

Regulation and Consumer Protection

It’s generally understood that, regardless of the law, people are already betting on sports. Many of the existing black-market platforms are linked to organized crime or are simply offshore companies operating legally in their own countries. As a result, bettors have little to no protection in the case of a dispute. For example, there is no guarantee that an illegal betting platform will payout a bet, especially large bets, and there is no legal recourse available to the bettor. Legalizing sports betting allows governments to regulate the industry, set standards, and increase consumer protections. Restrictions can also be put in place that set limits on compulsive and potentially harmful gambling behavior. Further, a legalized industry allows for more visibility into potential integrity issues such as match-fixing, discussed further below as a potential risk.

Increased Tax Revenue

Of course, governments don’t just want to regulate gambling on sports – they also want the ability to tax it. Illegal or offshore platforms don’t pay tax, and governments want their share of the massive revenues these companies can bring in.

After legalizing recreational cannabis usage in 2012, the U.S. state of Colorado has collected over $1.6 billion in fees and taxes. Many jurisdictions are hoping for a similar tax windfall from the legalization of sports betting. In British Columbia, the BCLC estimates that single sports betting would generate between $125 - $175 million in additional revenue each year. New Jersey, which already has one of the most advanced sports betting markets in the U.S., raised nearly $50 million in tax revenue in 2020 despite the widespread cancellation of games due to the pandemic. Across the U.S, nearly $800 million has been collected in taxes since 2018.

There is some concern that the tax rates and fees imposed on legal sports betting will make these platforms less attractive to consumers. The NCSL reports that most U.S. states charge between 5 and 20 percent taxes on betting, while Pennsylvania charges more than 33 percent. Unimpeded by these additional costs, black-market sites can offer lower prices and better payouts, keeping consumers on their platforms and hindering the switch to legal businesses.

New Sponsorship and Revenue Opportunities

It’s not just governments that are eager for new revenue streams. Despite a long history of hesitation and fears around the impacts of gambling, professional sports leagues are now signing huge sponsorship and licensing deals with sports betting platforms.

NBA Commissioner Adam Silver was the first of the major North American sports to publicly speak out in favor of legalized betting in 2014. Since then, the NBA, NHL, MLB, and NFL have all partnered with bookmakers in multi-million-dollar deals.

It’s not just the leagues that have changed their approach – clubs and broadcasters have also gotten in on the action. MLB’s Chicago Cubs, for example, signed an exclusive deal with DraftKings worth $100 million. Similarly, NBC Sports agreed to a five-year deal worth $500 million with PointsBet.

Despite the massive numbers, sports organizations should be cautious in how they approach these partnerships. A 2020 survey of soccer fans found that a third would be put off from buying their club shirt if it had a betting sponsor, while nearly two-thirds believed that the current restrictions on gambling ads did not go far enough.

The Arguments Against Legalized Sports Betting

Gambling Can Be an Addictive and Damaging Behavior

Widespread access to gambling platforms increases the risk of addictive or problematic gambling behavior. Problematic gambling can lead to high rates of debt, increased risk of psychological difficulties, poor workplace or school performance, and other challenges that can negatively impact an individual.

It’s estimated that 6 percent of college students in the U.S. have a serious gambling problem. A study by the National Council on Problem Gambling showed that sports bettors in particular had significantly higher levels of problem gambling than those who gambled on other activities and that the risk of addiction is higher for young adults.

Aggressive advertising campaigns and the rise of online and mobile betting platforms have increased these risks. One survey found that sports bettors who use mobile devices have a higher incidence of problem gambling and that gambling problems increase with online betting.

New Jersey, which as mentioned above has one of the most developed legal sports betting industries in the U.S., found that more than a quarter of all calls to the gambling hotline were related to sports betting.

Increased Access for Young and Underage Bettors

Concerns around access are not only limited to adults. The rise of online and mobile platforms has been found to increase access for young and underage bettors. This is highly concerning, as studies have found that even exposure to simulated gambling games that use a virtual currency is linked to an increased risk of monetary gambling and gambling problems.

Young people already have higher rates of problem gambling than adults. A Canadian study conducted from 2012-2013 found that 41.6 percent of adolescents had gambled in the past 3 months and that the most popular form of gambling was online sports betting. Compared to those who only gambled at casinos or other physical locations, a significantly higher proportion of youth online gamblers had high or low-to-moderate levels of problematic gambling.

Online platforms lack many of the security measures put in place at physical locations. Age verification and ID checks are often only done upon the creation of an account, meaning a youth can simply access an adult’s account and bet without restriction or supervision.

Match-Fixing and Integrity Challenges

The resistance to sports betting from leagues and other organizations has centered around the risk of match-fixing and other integrity issues. Massive amounts of money can change hands from a single match, and this can lead to bribes and other attempts to affect the results.

The COVID-19 pandemic has coincided with a spread of match-fixing. A recent Guardian article showed that, despite fewer games played in 2020, the amount of suspicious activity and match-fixing increased across the 26 sports surveyed.

Much of the activity has shifted away from the major professional sports leagues to lower-level leagues, less popular sports, and volunteers, officials, or other actors besides the athletes themselves. Paid at lower rates and generally less observed than professional athletes, these individuals are more susceptible to bribes and are therefore more easily influenced.

Despite this, a Transparency International report suggests that the legalization and regulation of sports betting will actually help to control the problem of match-fixing. The increased attention on the industry can help to catch suspicious activities earlier, while agreements between the leagues, betting platforms, and regulatory bodies can ensure that information is shared and that any issues are reported and investigated immediately.

Australia, for example, which has a long history of legal sports betting, allows sports organizations to request operators undertake an integrity check. Similarly, the regulatory body in France has access to all players’ betting information.

Legal Sports Betting Is a Big Industry That Will Continue to Grow

Despite the risks and challenges associated with sports betting, the trend is currently pointing to a more open, legalized, and regulated market across North America. Enticed by huge potential tax revenues and the ability to wrestle control away from organized crime and other black-market participants, governments are enacting laws to allow and control sports betting.

Like any form of gambling, individuals should set limits and only gamble what they are prepared to lose. Legal platforms should provide tools that allow you to control the amount of money and time that you spend on the site. If you are concerned about your gambling behavior, contact the National Helpline in the U.S. or your provincial gambling hotline in Canada.

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Is Canada Really in a Recession?

23 Dec, 2023

Context A CBC News article discussed the possibility of the Canadian economy heading into a recession, or whether the country has already passed that threshold. The article discussed this possibility based on slowed growth, high inflation, and the Bank of Canada’s continued interest rate hikes. Analysis A recession is a significant reduction in economic activity that occurs over a length of time, usually months or years. One of the most accepted definitions of a recession comes from the economist Julius Shiskin in 1974, who identified the threshold to an economic recession as two consecutive quarters of declining GDP, although economists often argue about the comprehensiveness of this measure. The causes of a recession can be quite complicated and have many contributing factors. Some common examples include a sudden economic shock such as the recent COVID-19 pandemic, excessive debt, asset bubbles, inflation, deflation, or large technological changes. One major factor influencing the probability of an economic recession includes rising interest rates from the Bank of Canada, which has implemented the highest hike in the shortest amount of time in all of the bank’s history, raising the rate over eight times since 2022. The Bank of Canada increased interest rates in order to curb inflation since rising interest rates discourage taking on debt and spending. This further encourages companies to lower prices or slow inflation to increase demand. Currently, the Bank of Canada is keeping at the 5.0 percent rate but has said that further hikes are not off the table as inflation may continue to exceed acceptable rates. Increases in interest rates can certainly contribute to or precede a recession. In fact, the Bank of Canada has raised interest rates three times to slow inflation since the 1960s and all three times this action led to an economic recession. Current fears of a looming economic depression are also not unique to Canada, as following the COVID-19 pandemic, the global inflation rate increased to 8.73 percent in 2021. This was due to supply chain issues, as well as the effect of the Russia-Ukraine War creating rising food and energy prices, as well as general fiscal instability. A majority of the World Economic Forum’s lead economists agreed earlier this year that we could see the beginning of a global recession starting in 2023, which would certainly affect the Canadian economy. The article also discusses the Canadian economy’s slowed economic growth, as the GDP has stagnated in the second quarter of this year. However, it suggests other factors may explain the decrease, including striking port workers in British Columbia, and the resulting negative effect on economic activity. An RBC report mentions how on a per-person GDP basis, there has already been a decline for four straight quarters despite a surge in population growth, and concludes overall predictions for GDP growth do not look promising despite local factors including Canadian wildfires and strikes. They also point to a 0.5 percent increase in the unemployment rate over the past few months, which has historically tended to indicate a looming recession.

Ottawa Mayor and Lansdowne Park

21 Dec, 2023

Context The City of Ottawa Mayor, Mark Sutcliff released a statement about a revised plan for the redevelopment of Lansdowne, an urban public park containing historic landmarks and commercial venues. The project includes the demolition of a sports arena complex, stadium stands, and the building of a new event center, residential units, and retail space. Despite suggesting the new plan has addressed the concerns of residents, many issues remain. Analysis The City of Ottawa and the Ottawa Sports and Entertainment Group (OSEG) have been in partnership to develop Lansdowne since 2012 and finished an original redevelopment of the park back in 2014. A few years later in 2019, the financial sustainability of the park came to the city council’s attention, and in 2020 the partnership was extended another 10 years with direction to develop a new plan to revitalize Lansdowne. Consultation with community members started in 2020, with the original concept released last year in 2022, and a revised version released this month. Community feedback was acquired through various platforms including public information sessions, an open email for feedback, and public surveys. A summary report of that feedback was published on October 6th, which highlighted the six most common themes of community residents’ concerns. The first concern was related to the size and number of the multiple high-rise apartments which were designed to exceed 30 floors. In the new plan , they have removed one of the three planned buildings, with fewer total units in each, and only one tower with the potential to be built at 40 stories. Residents were also concerned about the loss of greenspace due to the new event center construction. Many people suggested they wanted that greenspace allocated elsewhere, or alternatively, an accessible greenspace roof on the event center. Although in the original plan the city had conceptualized a greenspace rooftop on the event center, this was scrapped in the new plan as it was deemed too expensive to maintain. Respondents wanted a restriction of vehicles to the premises to promote pedestrian safety, a concern that has existed since Lansdowne was first renovated back in 2014. They also wanted more public transportation infrastructure to and from the park, whether that is the local city buses, trains, or cycling infrastructure to reduce congestion on connecting roads. Relatedly, residents also desired more accessible public use space from washrooms to water fountains to usable and free space for people to occupy. The new plan has reduced the number of parking spaces for the residential buildings to meet the Bylaw limit of 0.4 spaces per unit, down from 739 to 336 spaces, while they added 36 new spaces for the event center. In terms of accessible public space, the new plan includes 27,000 square feet of space originally earmarked for the third residential building, now available for an unspecified “public realm.” Residents also wanted more local and less corporate or big-box businesses, to reflect the unique local community better. The new plan does suggest the amount of retail space has been reduced from 108,000 square feet to 49,000 square feet but does not directly address the desire to attract smaller, local businesses. Finally, there was also a concern about financial transparency of how the project is being funded and the resulting impact on the City. The Federation of Citizens Association (FCA) which represents over 70 community groups voted unanimously to oppose the new plan, which comes with a very costly price tag of $419 million, increased from $332 million of the first plan. They cite that the debt comes at a time when the transit system is facing major issues, and the city is struggling with a housing affordability crisis.

Danielle Smith - Conflict of Interest

20 Dec, 2023

Context Newly elected Premier of Alberta Danielle Smith has defended her cabinet which is coming under fire over conflict-of-interest concerns. Environment and Protected Areas Minister Rebecca Schulz’s husband, Cole Schulz , may be lobbying the government in the areas that the Minister works in. Cole Schulz's firm is working on removing the protection of a threatened caribou range to make room for the oil and gas industry – which has raised concerns over who has Minister Schulz’s ear. Analysis The company that Cole Schulz is a partner with, Garrison Strategies, was hired by the Explorers and Producers Association of Canada and is working to influence the government on the issuing of reclamation certificates for oil and gas sites. The lobbyists are working to gain more access to protected caribou habitats to expand the oil and gas industry. They are hoping to “ address the moratorium on tenure in caribou regions ” which would effectively give them better access to land and investments. The Little Smoky and A La Peche herds in northwest Alberta were protected by a moratorium in 2013 which stopped the granting of new energy leases in this area. At the time, 95 percent of the herd’s range was heavily damaged. Phillip Meintzer of the Alberta Wilderness Association found that though records show that Garrison didn’t contact Environment and Protected Areas directly, the firm’s causes are “ too close for comfort ”. Meintzer also notes that as Garrison works on opening the protected caribou land for Alberta Energy, Environment and Protected Areas should be working on a protection plan for the federally and provincially designated threatened animal . Minister Schulz is working closely with the ethics commissioner, however, Danielle Smith confirmed that “ the ethics commissioner has looked at it, given guidance and there’s no violation [of the Conflicts of Interest Act]”. Cole Schulz also indicated that his firm wasn’t aware that Minister Schulz breached the Act at any time. Meintzer suggests that this situation “ calls for a further look ” from a third party. Sources https://globalnews.ca/news/9988998/alberta-premier-danielle-smith-rebecca-schulz/